Requirement 1. Review Item 7 (Management\'s Discussion and Analysis of Financial

Question

Requirement 1. Review Item 7 (Management's Discussion and Analysis of Financial Condition and Results of Operations) included in the 2015 Annual Report. What does Amazon.com, Inc. state is the company's financial focus? What are free cash flows and how does Amazon.com plan to increase its free cash flows?

Amazon.com, Inc. states their financial focus is on

long-term, sustainable growth in free cash flows per share.

Free cash flows are the amount of

cash available from operating activities after paying for planned investments in long-term assets and dividends.

Amazon.com plans to increase its free cash flows by

increasing operating income and efficiently managing working capital and cash capital expenditures.

Requirement 2. Review the statement of cash flows for Amazon.com, Inc. What type of noncash adjustments to net income did Amazon.com report in 2015? (Select the six correct answers.)

A.

Deferred income taxes

Your answer is correct.

B.

Losses (gains) on sales of marketable securities

This is the correct answer.

C.

Impairments

Your answer is not correct.

D.

Depreciation and amortization

This is the correct answer.

E.

Lease abandonment

Your answer is not correct.

F.

Stock-based compensation

Your answer is correct.

G.

Excess tax benefits from stock-based compensation

Your answer is correct.

H.

Other operating expense (income)

This is the correct answer.

I.

Gain on divestiture of business

Requirement 3. Review the 2015 statement of cash flows for Amazon.com, Inc. What was the net cash provided (used) for investing activities? What were the cash inflows and outflows related to this section? (Complete all answer boxes. Enter the net cash amount in millions as shown in Amazon.com's 2015 statement of cash flows. Use a minus sign or parentheses for a net cash outflow.)

The net cash provided by (used in) investing activities was $

million.

This included the following inflows and outflows:

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Save Accounting Table... + Copy to Clipboard... + Before you begin this assignment, it will be helpful if you review Amazon.com, inc. 's 2015 annual report (http:lohx coroorate-ir.netphoenix.zhtml?c 976648oFirol-reportsAnnual) Amazon.com, Inc. serves its customers through its retail Web sites, selling millions of unique products. In addition, the company manufactures and sells electronic devices including Kindle e-readers and Fire tablets. Amazon.com also offers Amazon Prime, a membership program that includes unlimited free shipping on items and access to unlimited streaming of movies and TV episodes. Read the requirements. compensation Requirement 3. Review the 2015 statement of cash flows for Amazon.com, Inc. What was the net cash provided (used) for investing activities? What were the cash inflows and outflows related to this section? (Complete all answer boxes. Enter the net cash amount in millions as shown in Amazon.com's 2015 statement of cash flows. Use a minus sign or parentheses for a net cash outflow.) The net cash provided by (used in) investing activities was $ This included the following inflows and outflows:

Explanation / Answer

Requirement 3:

Investing activities in a company indicate the cash spent on capital asset such as plant and equipment etc.

Cash flows from investing activities involve cash spent on purchasing those fixed assets, gains or losses involved and other changes that contribute to the change in the cash position of the company.

Cash flows used in investing activities with cash capital expenditures including lease hold inmprovemnts, internal-us software and website development costs, cash outlays for acquisitions, investments in other complanies, marketable securities etc, are $6,450 Million in year 2015.

Additional investments in technology infrastructure (Majority to support AWS)
and additional capacity to support fulfillment operations = $4,600 Million

Internal software and website development charges = $528 million

Acquisition and other investment activity = $795 Milion

Total break up available = $4,600Mn + $528Mn + $795Mn = $5,923 Mn

which is 92% (5923 / 6450 * 100 = 92%) which is sufficient as per the accounting standards

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